Q3 2022 DigitalBridge Group Inc Earnings Call

Greetings and welcome to the Digital Bridge Group, Inc.

Quarter.

2022 earnings conference call.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

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As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Severin White, managing director head of public Investor Relations.

Please go ahead.

Good morning, everyone and welcome to the digital bridges third quarter 2022 earnings Conference call speaking on the call today from the company as Marc Ganzi, our CEO and Jackie our CFO I'll quickly cover the Safe Harbor and then we can get started.

Some of the statements that we make today regarding our business operations and financial performance, maybe considered forward looking and such statements involve a number of risks and uncertainties.

Cause actual results to differ materially.

All information discussed on this call is as of today November four 2022, and digital bridge does not intend and undertakes no duty to update it for future events or circumstances for more information. Please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC and our Form 10-Q for the quarter ended.

September 32022.

Great. So we're going to start by covering our quarterly agenda, Mark will give our <unk> business update Jackie will outline our financial results and turn it back over to Mark to wrap up section three executing the digital playbook.

We made some great progress towards our 2022 goals from capital formation to continuing to strengthen our capital structure. So let's get started with that I'll turn it over to Marc Ganzi, our CEO Mark.

Thanks, Deb and I want to thank our investors upfront for your interest and your continuing trust into digit rich team.

As we navigate we believe very successfully a challenging macro environment.

Today I want to cover the three things that really matter.

Something I've learned successfully navigating other market cycles over the last 27 years as when conditions get difficult you sharpen your focus on a few key objectives.

In our case.

It's the three outlined on this page.

Forming capital.

Forming capital around great digital infrastructure companies and investment strategies.

Walk you through the success that we're having and raising capital and what are otherwise tough market conditions.

Number two delivering great outcomes for our investors.

This is the heart of the didn't rich value proposition and when we're successful it has a compounding effect that stimulates further growth in our platform and generate performance fees for our investors and you are public investors.

We did that this quarter closing the data bank and wild stone transactions and I'm going to talk about that in great detail in section three today.

The third objective.

Simplify our business.

Build liquidity to weather the storm and maintain the firepower to redeploy to accretive uses while at the same time deleveraging our balance sheet and deleveraging our portfolio companies. This is how you weather the storm.

So those are the three simple components of what it takes to win in this environment next page. Please.

Before we get into capital formation I wanted to cover something we did last quarter and give you very specific insight into how our portfolio companies are performing how are they handling inflation.

Interest rates geopolitics and supply chain headwinds.

Once again as you can see here, we continue to deliver growth across each of the core verticals.

<unk> monthly revenue reoccurring revenue up 26%.

Data centers up 34%.

Labour bookings up 5% and small cells monthly reoccurring revenue up 28% year over year. This is critical digital infrastructure. These are the assets that enable our economy, whether it's a recession or whether its a great economic backdrop, everyone needs digital infrastructure to perform their daily <unk>.

<unk> activities.

That's testament not only to the incredible management teams, we are running these businesses, but to the fundamental truth that the key driver of our businesses and our returns is the powerful secular demand for more better faster connectivity not interest rates.

Don't forget that we have made money over the past 25 years, because we are business builders and digital infrastructure, we're not financial engineers and.

In fact, it's that experienced managing through the tough cycles that informs the conservative approach to portfolio that you see on the right side of the page.

Last year I delivered an edict across our portfolio to securitize many of our companies that hard work has paid off as our portfolio is protected this.

This is not an accident.

Our loan to value across the portfolio is 41% today.

It's actually down from 43% last quarter seven.

75% of the portfolio is fixed rate debt.

And the average maturity profile of our debt is eight years. These are astounding statistics and once again proving that we built a resilient portfolio that is built to play offense, while we defend our balance sheets of our most valuable assets.

This is a portfolio that continues to grow driven by increasing customer demand that's conservatively capitalized to perform through this cycle. This is a playbook that has worked before it will work today.

Next is capital formation, we've highlighted it as the number one kpis to drive growth and earnings in our investment management platform.

I'm incredibly pleased to report that on a year to date basis, we've raised over $6 8 billion with $3 4 billion in firm complemented by $3 4 billion as part of our very successful co investment program, which I'm going to highlight on the following page.

As you can see here, we raised over 1 billion in new fee them last quarter.

The upsizing of the data bank recap and additional commitments to our new core and credit strategies are working.

As we formalized first closes on these strategies over the next quarter, you'll start to see the financial impact flow through this sets us up for continued growth not only through this year, but into 2023.

The progress puts us on track to exceed the targets we laid out earlier this year, despite the volatility in financial markets that youre seeing today.

In fact this is the number one question we get on the road today can you still raise capital in this environment look the answer is a resounding yes.

Institutional investors continue to value the unique combination of resiliency and growth the digital infrastructure delivers and they want a partner, especially now with the leading specialist in the sector.

Next page please.

Last quarter I told you would expect to hear more from us on co investment as the year progressed.

Particularly around the new signature platform investments, we made in the U S data center space and European tower sectors.

If you look at the middle two columns here, you'll see that we've raised co investment commitment of over $2 billion.

To support these new deals last quarter, that's just in the last quarter alone.

That's not including <unk> Brookfield, those are new commitments, principally from our existing LP base.

It is a powerful demonstration of the strong desire of our limited partners.

Have to continue to allocate capital alongside of us into the highest quality digital infrastructure assets Alere.

Alleviating and anxiety point for public investors today.

We've raised the money.

Even better we've used up a lot of the fee free co invest allocation, we make to our anchor investors.

Moving us closer to generating additional fee them on future co invest and Catalyzing important capital formation as we move more than 90% committed and our flagship <unk> partners to fund.

Our co investment program is an important commitment to our Lps it.

It helps drive fund raising by deepening the relationships with key strategic Lps, as we evaluate and underwrite opportunities together.

To wrap up on capital formation. The Bottomline is simple we raised $6 8 billion year to date across the platform with.

With over $3 billion of that in the last quarter alone.

We remain confident and convinced of our ability to raise capital into the back half of this year.

Next page please.

Before I turn it over to Jacky to cover the financial results I want to highlight some of the great progress, we made last quarter continuing to simplify our business and our capital structure.

First we rolled out a new corporate overview that highlights the elevation of our asset management platform as the strategic growth driver in our business.

We are the leading specialist asset manager investing across the sector with strong secular tailwind.

Simple, it's a very scalable asset light and high return on invested capital business with one simple kpis.

Doubling our assets under management over the next three years.

Next we strengthened liquidity, which I described earlier is a key success factor in periods of dislocation like this.

Last quarter, the data bank recap sale of legacy assets and a partial return of warehouse investments brought over $500 million back.

Back to our balance sheet.

We de cluttered, our corporate liabilities with the transfer of a $225 million of CLO and next quarter will free up even more capital to fund the A&P acquisition, while maintaining strong liquidity.

Finally during the third quarter, we took advantage of dislocated markets. We told you we would we bought back $53 million of our preferreds at a discount.

Even better we were able to execute stock buybacks of over $50 million retiring two 4% of our shares outstanding.

We believe buying more of our own business at these levels will prove to be a very compelling investment over time and increase EPS.

All three of these initiatives advanced our track record and continued progress towards greater simplification. This was a simple tenant that I promised to all of you.

I know during turbulent markets the pace of change can flip from executing ahead of expectations to are they doing too much.

But rest assured we're not doing too much we remained focused on further simplification and maintaining strong liquidity through this period.

With that I'd like to turn it over to Jacky <unk> to cover the financial results Jackie.

Thank you Mark and good morning, everyone. As a reminder, in addition to the release of our third quarter earnings We filed a supplemental financial report this morning, which is available within the shareholder section of our website.

Starting with our third quarter results on page 11, the company continues to see strong year over year growth driven by fund raising in our investment management business and realized performance fees for.

For the third quarter reported total consolidated revenues were $297 million, which represents an 18% increase from the same period last year.

GAAP net income attributable to common stockholders was $63 million loss or <unk> 39 per share. The third quarter includes a $60 million loss related to a mark to market adjustment from our remaining legacy bright spire shares.

Total company adjusted EBITDA was $29 million, which grew from eight 2 million in the same period last year.

<unk> earnings was $39 million, which included $20 million of net carried interest received from both the data bank recapitalization, and wildstar realizations plus $9 million of realized capital gains on D. Brg's investment in wild stuff note that distributable earnings does not include <unk>.

<unk> gains on database as this is a consolidated asset within our operating segments and a reminder, its realization with at a two times multiple on invested capital we.

We are focused on growing our recurring cash flow profile, which continued to be positive in the third quarter accelerated by significantly reduced corporate debt service and continued growth from fundraising.

Digital <unk> with $50 billion in the third quarter, which grew by 33% from $38 billion in the same period last year, we expect to continue our strong growth trajectory and including the recently announced pending transactions that A&P capital switch and Gd towers, we will have rates.

$65 billion.

On a pro forma basis.

Moving to page 12, the company continued to grow recurring investment management revenue and earnings driven by increased fee, earning equity under management.

Excluding one time fees consolidated fee related earnings increased by 14% year over year, while the company share grew by 68% benefiting from 100% ownership. Following the buyout of <unk> 31, and half percent interest during the second quarter.

Moving to page 13, our digital operating segment has continued its growth in the third quarter consolidated adjusted EBITDA was $91 million during the third quarter, which is a 13% increase from the same period last year.

Driven by continued data center acquisitions, including Houston area of data centers that data bank and CA 22 at vantage SDC.

In the third quarter the company sold 35% of its ownership interest in data bank.

Turning to page 14, we have seen continued growth in our digital reporting segment, particularly in our high margin investment management business. We should note that the pro forma amounts shown on this page include the pending A&P transaction.

Since third quarter 2021, our annualized fee revenues increased from $106 million to $235 billion in FRE increased from $60 million to $123 million on a pro forma basis.

We are excited to have increased exposure to this high growth I am business, which has materially improved the company's cash flow profile since it is asset light and anchored by long dated fee streams.

Looking at the right side of the page in line with our forecast our annualized revenues decreased from $132 million last year to $114 million in annualized EBITDA decreased from $56 million last year to $47 million as a result of the successful recapitalization of database, which law.

Our ownership percentage from 22% to 13%.

Subsequent to the end of the quarter, we sold down to approximately 12% ownership of database.

Turning to page 15, the company has built significant liquidity, but the digital bridge balance sheet. Our liquidity has increased by $435 million since last quarter driven by proceeds from both the data bank and Whitestone transactions partial return of warehouse funding and continue.

Legacy asset sale.

Are on track to reach our forecast of $623 million of balance sheet liquidity in the first quarter of 2023 and are strongly positioned to cover our near term obligations such as the closing of A&P capital acquisition <unk>.

Additionally, we have further potential sources of capital, including B RSP shares and remaining legacy assets, which can be utilized to offset medium term obligations such as the upcoming 2023 convertible note repayments and future fund commitments, we expect to remain well positioned to deploy capital more creative.

Users.

Moving to page 16, we have continued to make significant progress improving our debt metrics, our corporate debt to I am FRE ratio of six four times down from eight nine times last quarter. Our overall debt has decreased by approximately 23%.

This reduction is primarily driven by lower pro rata debt as a result of the data bank recapitalization of $152 million reduction in total debt.

And the deconsolidation of warehouse investments, we are on track to meet our goals for the first quarter of 2023.

We will pay down the convertible notes due in April continue to syndicate, our share of Databank and transfer our warehouse debt to the funds.

Digital bridge continues to make significant progress simplifying the balance sheet, reducing debt and improving corporate leverage metrics, we target corporate leverage overtime in the three times to five times range.

In summary, and as I've continued to reiterate our company is strong and healthy driven by our sector, leading asset light investment management business that generates high quality predictable and long dated the earnings.

We expect to have a strong finish to 2022 as our near term fund raising and our growth prospects remain robust and with that I will turn it back to Mark.

Thanks Jackie.

And our last section I want to cover the second success factor I outlined at the beginning of the call.

Our ability to deliver great outcomes for Lps and our shareholders. Despite the backdrop of market volatility.

During the third quarter, we closed two realizations at very attractive valuations generating strong proof points that we expect will catalyze one future capital formation as we go out and raise new capital next year.

And that generated over $20 million and net carried or our shareholders.

This is so critical for the future of this firm.

We need to continue to form capital and we need to continue to deliver great results for you, which in turn delivers carry back to our public shareholders.

This was a key proof point in this quarter.

The first stage of the data bank recap was upsized from $1 2 billion to $1 5 billion and.

And we reached a subsequent agreement to take the total recap up to 2 billion, creating a new long term continuation vehicle that brings in new investors with fee and carry.

We also closed on the wholesale of Wild stone, our first realization in <unk> partners, one generating a great IRR and a solid $1 seven ROIC for Lps and less than three years.

Another important data point here is the sale prices over 40% above our carrying value.

This is a great indicator of our conservative approach to marking our portfolio.

As part of our strategy to build the fastest growing outdoor media infrastructure business in Western Europe , we executed over a dozen tuck in acquisitions.

I want to personally give a shout out to my partner Damian Cox Wild stone, CEO , who executed a value add build it up right out of the box playbook that digital ridge has executed time and time again.

Kudos to Damian and the entire team.

Next page please.

Before we move on it's worth giving some more context to the data Bank case study.

Because it's such a great example of our ability to deliver results on multiple fronts. All at the same time.

To start in just two and a half years, we've turned a $500 million investments off the balance sheet into almost $1 billion of value.

That's a two times, Mike and an internal rate of return of 32%.

Next we're harvesting over $400 million of profits as part of the recap at 30 times trailing EBITDA.

While maintaining participation and the continued growth at Databank.

As importantly, investors continued to demonstrate growing interest in the opportunity despite unsettled financial markets highlighting enduring value that we're creating in this platform.

Finally in addition to doubling our money and taking half the value off the table at a great valuation. We're also boosting the management fees we earn in.

In this case up 27% from prior levels.

This incremental management fees don't have any associated costs. So.

This is literally 100% flow through to earnings.

Next slide please.

Before I wrap up with the quarterly CEO checklist I want to take a minute to acknowledge a milestone in the journey, Ben Jenkins and I set out in 2013, when we formed digital rich <unk>.

My vision was pure passionate and simple.

We wanted to back Great management teams with best in class platforms anchored by long term leases and strong secular tailwind supporting the digital infrastructure ecosystem.

Nine years into this journey the mission remains the same as does the passion.

This year not only did we break into the top 10 infrastructure managers ranked by capital formation, but where the first specialist infrastructure fund manager to reach the top 10.

Look none of this could have happened without the entire team of over 250 professionals that digital bridge, making it happen every day around the globe.

I am deeply grateful for their hard work and support and here's the best part we think the journey has just begun.

Next page.

Finally, as I always do I'd like to close the call with the CEO Checklist. This is where I take stock of what we've accomplished and what I'm looking forward to getting done in the periods ahead.

First capital formation, our key Kpis, we've raised over six $8 billion year to date and over $3 billion in the last quarter alone around the data bank recap new investment strategies, new platform companies through our successful co investment program.

<unk>.

Deliver great outcomes for you our investors and our Lp's with the data bank recap that got Upsized twice last quarter and Wild stone, our first full realisation from GBP one.

We generated over $20 million in carry for <unk> shareholders as part of these deals. This is the key proof point.

Our program is working and our carry is very valuable for you our public shareholders.

Finally, we further simplified our business with a clear business model centered around our asset management platform.

We boosted liquidity by over $500 million, and we executed an accretive preferred and common stock repurchases.

We got a lot done during the third quarter.

And I've got another compelling list of to dos in the quarters ahead.

Raising capital around corn credit.

Closing, our very accretive A&P transaction at a corporate level.

Getting the switch transaction closed into our <unk> platform and continuing to Delever and strengthen our liquidity position.

I'm confident we can accomplish these goals because notwithstanding market volatility our business is incredibly resilient.

Managing long term capital on behalf of the leading global Lps and shareholders in a sector with strong secular tailwind led by a team with a 25 plus year track record of execution.

Once again I. Appreciate your continued interest and did a rich and I look forward to sharing our progress next quarter as we execute on our strategic roadmap to double over the next three years.

With that I'll turn it back over to the operator to initiate the Q&A section. Thank you.

Thank you.

At this time, we will be conducting a question and answer session.

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One moment, please while we poll for questions.

We have our first question from the line of Michael <unk> with Cowen. Please go ahead.

Great. Thanks for taking the question guys.

If I may we will start with the first one and I'll circle back on the second.

You've been clear about repositioning the digital bridge story, so one focused on the investment management business given its higher growth it's asset light among other factors just as you think about simplifying the digital bridge story further do you think it makes sense to fold in the operating business into the investment management business. So that you can refocus investors solely on the merits of I am. Thanks.

Yeah.

Hey, Michael Good morning, well look we've already started down that road right I think the key to this quarter is the recognition that data bank has now been transitioned into a continuation fund. So the importance. There is moving from an operating business into a long term permanent capital vehicle. So that asset now has officially been transition.

And into our <unk> platform and we did so I think pretty pretty graciously right because not only did we return capital back to the balance sheet and create a great outcome and a great return, but we also increased our management fees at the same time, while keeping control operational and control the asset so one down one to go vantage STC.

Continues to remain on our balance sheet.

It's not in the continuation fund vehicle today. It is in a permanent capital vehicle, which is a long term partnership amongst a series of institutional investors and once again, we do maintain operating control that asset and were thinking.

Around a couple of different ideas on how we would transition that asset into our ion platform, but I think what you've seen in this quarter as the as the final.

Piece in the puzzle around simplification and the commitment to our what we believe is the asset light approach to owning and operating digital infrastructure.

Good question, but thank you.

Great. Thanks, Thanks for that Mark and my second question would be you've laid out clearly your targets.

<unk> just as we think of the path forward from here how would you describe the opportunity to raise added another flagship fund just as we think about LP appetite and then as part of that relative pockets of opportunity that you see as you look to deploy incremental capital that you raised.

Yes. Thank you again, the right question to be asking at the moment, So first and foremost around capital formation, we had a really strong third quarter.

In a market that I think we all understand is has some has some cross winds and some challenges. The fact that we raised $3 billion in the quarter. When a lot of folks are not raising any capital I think is proof that this particular management team is capable of raising capital in the storm actually think people appreciate that in the storm is when you're confined to your <unk>.

Michael the best opportunities, So we're pretty excited around.

Around capital formation, we're very busy and our entire senior leadership team is out fundraising right now.

We clearly think our flagship product is working over 90% of the second fund is now committed.

And spoken for so naturally we are working on new strategies here at the firm and those strategies align very carefully with our guidance for next year and.

And our guidance out until of course 2026.

Products that are working particularly well at the moment our credit product is working really well, we're very excited about that our returns are.

Clearly wide of what wed expected and we're seeing a doubling in the pipeline of opportunity in credit. So very excited about what dean is doing and.

And Josh parish in Christmas and those guys are really knocking it out of the park and so we continue to see good opportunity I think also.

Investors as we highlighted in the quarter.

When we create co investment opportunities when we give our lp's a chance to go side by side with us and opportunities that they like once again they are choosing the opportunities.

We're finding that investors really like that approach they want to be able to create a bespoke portfolio in digital infrastructure and given the depth of our portfolio and the global reach of it we can really tailor those solutions for clients and Thats really advantage for digital rich and advantage for Digirad shareholders, because we can sit with a sophisticated insurance company a sovereign wealth.

On a U S pension system and Canadian pension and we can tailor to what theyre looking for and given that we have exposure to liquid securities debentures credit core and our flagship product and co investments, we really have an arsenal of ideas that we can bring to clients to make sure that they are putting capital to work Michael intelligently.

<unk> and digital infrastructure and that we have the right teams that are executing those strategies very surgically. This isn't entirely transformed company today, where we've come in the last two years and our ability to work with investors on a global basis.

Tailor their needs too.

Take advantage of what we think is a great secular opportunity is second to none and I think that speaks to the difference between being a generalist and being a industry specialists like we are that industry specialist investment management asset light approach is now bearing fruit.

You see it in this quarter youre going to see it in the subsequent quarters and we're really happy with the simplification and most importantly, I'm really happy with the focus of where we're going this team is incredibly focused.

And.

We're going in the right direction of travel now.

Thanks for the color Mark appreciate it.

Thanks, Michael will talk later I appreciate it.

Thank you we have next question from the line of Dan <unk> with B Riley <unk> Securities. Please go ahead.

Yes. Good morning, guys I appreciate you taking the question so yes.

Yes, if we go back in time like a year or so ago. It seemed like a no brainer that you could.

The secured notes take out the preferred shares capture the spread between the two.

Things have changed a lot over the last year the cost of capitals come up.

Suddenly in an environment, where that 7% dividend on the preferreds are really doesn't seem all that expensive. So maybe can you just talk about your view on the preferreds in the stacker priorities for the dry powder you have got on the balance sheet, how that may have changed over the last quarter or two.

Yes, great question, So I think our priorities are.

Changing every quarter right I think you have to be very agile in this environment and we're constantly as a team and as a as a board reassessing, where we put capital to work I think we demonstrated in this quarter that.

That we are very committed to buying back our stock.

We executed a very successful $55 million share buyback program that Jackie and executed and we feel really good about where we bought the stock and we think ultimately it will be beneficial for shareholders because.

This only enhances EPS I think we've been very opportunistic when we think we can take our shots on the preferreds and when we think it's accretive to other things that we're doing and then it makes sense, but right now youre right. The cost of capital overall, Dan has moved up and so that bars moved up in terms of the returns that Jackie and I can generate for our shareholders.

Today, So we're being very selective about where we're putting capital to work as we should.

This was a year ago, you're right, we'd be happy with an outcome, where we'd get an 11%, 12% IRR on buying our preferreds back today that doesn't work.

For us, we're seeing opportunities, where we can get returns in the low to mid twenty's using our balance sheet. So we're going to be incredibly selective about how we deploy the balance sheet.

Jackie has done an incredible job restoring strong liquidity as you see in this presentation today over $400 million of cash today 300 million undrawn on the <unk> subject to market conditions on bright star being worth $200 million to $240 million. This company has over $900 million of liquidity, we have a $4 eight.

$1 billion of firepower down in our fund level, we've had a very very strong liquid position. So that we can play offense and what we think is candidly a very volatile market that's going to create really good opportunities I think we've both Jackie and I and the senior leadership team, we're building and operating businesses in <unk> III.

Obviously, Jack and I, both operated through 809, which created a lot of really good opportunity for where he was.

And it created a lot of opportunity for my management team and what we were doing so this is a management team that understands how important liquidity is and we cannot emphasize enough that having availability of almost $5 $8 billion of firepower to go play in this environment and to invest intelligently and create superior returns.

That is our highest responsibility to shareholders right now and at the same time, what's been awesome about what we've been able to accomplish in last few quarters is we've taken net leverage from almost nine times down almost six times in this quarter and we're targeting our net leverage to three to four turns.

In March of next year, so very few businesses out there can say that they can do that that they can rotate to the liquidity that they can delever their balance sheet and at the same time put up 20% to 30% organic growth like we've been doing this is a really really unique platform.

And I think having.

That opportunity to have that liquidity our discretion. We think is a real privilege and we plan to put it to work in a very intelligent way.

I don't know Jackie if you want to add anything else sorry, no no problem.

You are exactly right. It is cheap cost capital now and keep in mind, our balance sheet is super strong because of that to its perpetual it's not it's not a due anytime soon in and we've got more than enough liquidity to cover any and all of our financing needs, especially given an asset light investment management model. So.

Mark is absolutely correct.

Awesome, just one follow up for me.

When we did the A&P global acquisition earlier. This year, you guys talked a lot about.

Opportunities for other complementary M&A within investment management.

See with A&P. It made a lot of sense. It was a middle market a little different space than the flagship Pvp funds.

Going forward. It feels like you have to look a lot harder to find an asset manager. It's both complementary in nature and also playing specifically within digital infrastructure. So maybe you can just talk a little bit about what investment management fund types of products. You. Currently don't have exposure to that maybe you'd like to which one makes more sense to go out and acquire versus.

It's kind of starting your own product organically.

Yes. Thank you great. Great question, I think look Youll see just in this year alone that we've been able to.

<unk> demonstrate that we can do both right we acquired the A&P platform, which gives us access to middle market digital infrastructure, which is writing those tickets between $100 million to $250 million, which is just something we don't do and so that was pretty valuable to us. In addition to that their logistics platform and their renewable energy platform of very interesting too.

I think power is at an all time premium the ability to source renewable energy adjacent to digital infrastructure will candidly would be the difference between new wins and loses over the next 10 years. So we're very focused on that at the same time, we stood up new platforms.

We stood up for example, our digital bridge Alpha fund with Alan <unk> and his team.

Coming out of doors sold previously out of Janus stood up that business that is a liquid along liquid strategy, it's performing quite well and we were able to hire a team.

Get it up and running now they've got a year's worth of track record and we're seeing results in terms of fund raising and most importantly performance on that fund. Another example of that is credit and core we stood up to new strategies there.

<unk> and Mike Dupont, Josh Paris, Chris Moon, and then of course in our core fund, Matt Evans, and Peter Hopper, two great industry veterans that are well well healed and core.

Core strategies and data infrastructure last one our lease our venture fund getting out slowly coming out of Qualcomm capital.

Being helped by Matti yohanan than some other folks on our team here that's been incredibly valuable for us to we've done our fifth deal how does that strategy and once again that was homegrown.

So look the last thing that's missing here for US is is how deeper we're going to go and infrastructure.

I think as we integrate the A&P platform and we put the right people in place and we we of course harvest some of their assets and start investing in new assets we.

We will continue to monitor the digital plus strategy and let folks know how we're going to invest in those verticals I would mention one other thing before we probably go onto your next question, which is we are not in private equity today and that is one strategy that is clearly absent.

Our quiver.

We have the option of either standing up a team.

There are a series of other investment managers that are very strong that have a deep track record over 2030 years in digital private equity.

And as we think about that that is the missing piece of our ecosystem. So that can be everything from investing in tech to SaaS platforms to other forms of digital media and infrastructure. So there's quite a few firms that do it do it well they're friends of ours, sometimes we've co invested alongside of them and what I would say is we're looking at a variety of different.

Platforms that could fulfill that so we're not afraid to build we're not afraid to buy we've got strong liquidity, if we want to buy and what I can tell you as Jackie and the team have been very busy.

Evaluating new ideas.

Okay.

Great.

Appreciate it as always guys.

Thank you. Thanks, Thanks, Dan.

Thank you we have next question from the line of Jade Rahmani with <unk>. Please go ahead.

Thank you very much.

But we are seeing a big change in the cap rate environment across the real estate space. So I was wondering if you could share your insights on the digital sector in multifamily we've seen about 10% to 15% change in valuation much more severe than that in the office are you seeing the landscape spillover.

Over into digital infrastructure valuations notwithstanding.

Very strongly accretive transactions that were consummated.

Recently.

Yes, Thanks, Jay and good morning.

Well look I would tell you that across the five different basic food groups.

Seen some degradation in value and then in some sectors. We've seen no degradation in value, Let me walk you through where we see value.

I'd tell you first of all on the digital media infrastructure space. The transaction that we did with on 10 on Wild stone.

Was candidly a real marker.

That multiple at 26 times indicates that that that marketplace is hanging in and obviously, we will have to see other digital media infrastructure assets trade for us to figure out if those if that market is going to loosen or tighten, but we feel pretty good about that tower pricing I think is.

On a private market basis is probably lost maybe two to three turns in value I mean assets that would have traded at.

31% to 32 times a year ago today are trading at 26% 27 times I think you look at ultimately when we do close the Deutsche Telekom transaction that'll be closer to 23% to 24 times and Thats a premium asset.

You hear a lot of rumors about what's happening with the Vodafone portfolio, everybody will be watching that transaction, if something does happen there and there's been numerous private market transactions here in the U S and in Latin America that have all traded in the mid to high <unk>. So we haven't seen a material degradation in tower valuations in the private markets I would say fiber in the most recent trends.

Action is looming in Europe .

If you look at what for example, lumen sold their Latin America assets for to stone peak that was <unk>.

Low teens multiple and then you see these European assets traded 11 times.

That's a pretty big disconnect from where.

<unk> ultimately invested alongside of EQT, which was rumored to be in the low twenties. So <unk>.

Fiber continues to be kind of the wildcard were seeing valuations all over the place J nothing is.

Really hanging in but I think investors are discerning on fiber between what is consumer facing and month to month 30 day cash flows versus what is long term cash flows. We've got $5 10 to 20 year IRR use in long term agreements. So there's a lot of discrepancy in fiber valuations today and then in small cells.

The market continues to sort of defy gravity I mean, if you look at what.

I paid for <unk> by example, we cant even put a multiple on it we think it was somewhere in the low thirties and so.

Not a lot of small cell businesses come up for sale.

Theres another private market transaction in the U S. It is rumored to be trading in the low to mid thirties, and so small cell platforms are really rare jade. So we're not seeing any degradation in the cap rates related to mobile small cell infrastructure in fact, I would almost offer those those those multiples have actually gone up because of the scarcity.

And how much demand is coming in small cell infrastructure over the next decade, which is candidly going to be a faster growing vertical in towers.

Great I appreciate that color.

The stock is down today and a lot of deposits a lot of the commentary has been positive I think one of the issues with digital bridge and the valuation is understanding earnings you have given guidance on digital I am.

On operating but translating that to earnings is still I think challenging for investors and there continues to be some noise. Some noise with the consolidation some onetime items as well as equity income.

Counting related noise.

Is there anything any commentary you can provide on earnings per share or do you expect in the coming quarter or so to be able to provide some kind of outlook that would really allow investors to ring fence what earnings per share might look like over say the next one to two years.

Jay that's a great question, our expectation is that we'll be able to provide EPS guidance.

And I'll clear mapping of that going into next year. So that's our expectation our plan and you are right. It's gotten a whole lot better than certainly a couple of years back when we had a lot of fair value of our equity method earnings accounting.

Really the noise this quarter stems from as you mentioned the onetime items.

Really really catch up fee true ups.

Associated with prior year end and into this quarter as well as the fair value accounting associated with the bright spire shares that we have on our books and that's just really a function of the math. So if you back out the bright spire share about a fair value true up this quarter almost all of the losses associated with.

That so that those are really the two items that drove this quarter in terms of the EPS.

Hey, Jade with with respect to the noise I think.

My experience in this arena is that public investors hate complicated stories.

And what we've told you and what we've told the street very clearly as we've been very focused on cleaning up the story, we're past the cleanup phase. We're now in the simplification phase we've moved data bank over into the investment management business. We will eventually move vantage STC over in that direction and ultimately when you do that it.

Really cleans up the business Jade into one clean business unit, that's very easy for investors to understand the integration of A&P the Walter transaction.

Future fund raising that we have told you is coming in the subsequent quarters in terms of our guidance none of that remains unchanged, we cannot be more clear about where we're going and if folks can't do the math. They can certainly pick up a phone and we're always happy to have a call with them and explain to them exactly where we're going.

The ultimate success or failure of this firm is based on our ability to simplify the business unified into one business unit and then of course go out and continue to deliver the organic growth that we've been delivering in our investment management business for the last.

Eight quarters, we've been putting up double digit organic growth in.

In our investment management platform and we see nothing that will take us off of that top track over the next four to eight quarters. We're very confident about where we are and every quarter. Jade. This story gets easier for investors to understand less leverage more liquidity more fundraising less.

<unk>.

In fact, now you can actually put a value on carry for the first time, we've actually proven that we can distribute carry and we can exit certain asset. So that's something that historically no. One has given us credit for and here, we are managing over $20 billion of fee bearing carry bearing dollars at work and now you get to see some of that success or a taste of it and.

This quarter with data bank and Wild stone, we're in the right place we're doing the right thing and the simplification of the business is going to make it very easy for investors to understand the EPS next year.

Thank you very much I appreciate the comments.

Thank you Jade no problem.

Thank you we have next question from the line of Ric Prentiss with Raymond James. Please go ahead.

Hey, Thanks, everyone. This is Brent on for Rick This morning.

First question on the data bank recast thinking about further stages of that is there any additional color you can give in terms of.

Not only the timing, but the ability to get similar term as you continue through that recap and also just wanted to confirm whether you do still intend to hold a piece of that on the balance sheet. Once we get past the recap.

Yes. Thank you it's a great question so <unk>.

<unk> Bank is already now in a continuation fund.

The fund raising remains open until August of next year, we can take subscriptions all the way up to August next year.

There is $600 million remaining open that has not been committed to yet.

Have high conviction that we will fill that $600 million between now and August and ultimately that leaves us with a seven 9% stake in the company once the fund raising is fully complete.

That will deconsolidation data bank off of our balance sheet and it will sit very comfortably in a continuation fund inside of our investment management platform and that is where youll see the earnings ultimately attribute too.

Got it.

Helpful.

Then on.

On the investment management side is there any sort of breakdown you can give us on.

Your LP base in terms of the kinds of investors, whether it would be sovereign funds insurance companies pension funds as well as maybe geographically and whether thats changed at all as you've grown in sort of built your brand.

Yes. Thank you.

We don't disclose the exact names of our Mlps, but sometimes are our state U S pension fund Lps have to make disclosures when they enter our funds of sometimes you do pick that up in some of the trade journals, but.

Our investors remain confidential, but I can tell you sort of the two buckets that you've given me, which is geography and.

What type of asset allocators, we work with so from a geography perspective, our number one fund raising environment and market remains North America.

I won't give exact percentages, but it is a very substantial amount of our capital formation.

Historically speaking number two has been Europe .

Number three has been the middle East and number four has been Asia number five has been Latin America.

We do see a lot of opportunity right now in Asia I just came back from a two week trip, where I was in Asia working with our Lps Ben Jenkins was there a week ago. Jackie was there about six weeks ago. So we're incredibly active in that theater right now we do believe that we have.

<unk> had been historically under allocated from those Lps, they're really excited about what we did in fund two the three investments that we made in Asia are all performing our high performers and our second fund and.

Investors really Asian investors haven't had exposure to a digital specialists like us. So we're we're kind of the new Kid on the block and we're taking a lot of meetings. There is a lot of interest.

For new strategies, we anticipate our percentage of fund fundraising coming out of Asia is going to accelerate.

Into our strategies next year.

The Middle East, we also have been very active in that region as well.

It's a region, where those economies are doing quite well.

I was in that region for a couple of days last week seeing Lps very very excited about what we're doing.

As you can imagine because of their national natural resources.

Those sovereign wealth funds.

<unk> are experiencing rapid inflows not outflows.

Where you see some pension systems experiencing outflows. So good fund raising is about watching the market reading the market and.

And really paying attention to.

Pension systems that haven't really an inflow issue not an outflow issue.

So we're tracking that very carefully and being very surgical about where we're spending our time.

The fundraising environment is is tough right now it's not an easy environment you have to know exactly where to go as I said before you have to be very surgical.

It was not accidental that we raised $3 billion last quarter. It took a lot of hard work. It took a lot of focus and we'd continue that hard work into this quarter and we have a very very specific game plan for fund raising for next year.

We ratified that fundraising plan. This week here when we were here at our public board meetings and had our strategic planning sessions with senior leadership, we are ready to go and our entire senior leadership team is going to be out on the road.

Talking lp's tailoring ideas for them and creating opportunities for them to invest in digital infrastructure. We have one of the best fundraising apparatus is out there in the investment management space.

The gentleman the leaves that Kevin Smith, and our partner Lesley Goldman They do an amazing job of.

Really connecting with Lps and as we said on the call today, a strong co investment program really builds a lot of currency relationship currency with your Lps.

Been very good at that we're very active listeners and the fact that we have so many different digital.

<unk> management platforms, we can really tailor an investment program that works for that specific relationship to answer. Your last question in terms of where we are allocated to I would say pension systems tend to be.

Our biggest bucket of allocation number two would be sovereign wealth funds number three would be insurance companies number four be water called fund of fund managers and then number five would be what I would call private offices private family office capital we.

We take capital traditionally from a credit investors only.

And kind of in our fund products group today sort of minimum check sizes are kind of $25 million and up.

Got it that's helpful and then kind of the other side of the coin.

Is there any color you can give on your public investor base and really just how that's changed as you've read it and focusing more on the inside and now introducing the dividend as we kind of think about the appetite for the dividend and dividend growth and just.

Long term capital in your public stock.

How should we think about that and how that's evolved.

Thanks.

It's a thoughtful question so look our shareholder base started changing about two years ago.

When Jackie and I moved into the chair.

Focused on building.

Very good long term relationships with investors that Jackie I have known for over a decade. So.

Really investors that understand how to back great management teams that are focused on long term secular growth and then understand digital infrastructure, and obviously have known Jackie and myself and our other capacities that through the years. So when you look at our top 10 shareholders. These are long term holders and through this down cycle they are adding.

And a lot of the stuff you can see it's public information, it's not I'm not sharing anything with you that's nonpublic information.

As it relates to REIT investors, we actually still have some REIT investors and our capital base and they understand that what we're doing is intrinsic.

<unk> real estate, even though we're doing it in an asset light platform now.

Fundamentally nothing has changed we are still builders and owners and operators of the best digital real estate in the World. In fact, our portfolio is some of the most high quality assets in the world and because of the fact that the balance sheet has a big position in each of the funds if you own a share of <unk> stock you own those assets.

And you enjoy the benefits of those assets as well as the management fees and the carry associated with the success in those assets, but look the asset life.

The asset light business model is new and people generally take a little bit of time to understand and invest in what's new and I think we just got to keep pounding the story through and it's making sense.

Good strong institutional investors understand the quality of this team they understand the quality and our experience and they also understand that we've been through the fire before a one O. Eight now in 22. This is a management team that is very battle tested and understands how to navigate the storm look I can't I can't change what the share prices today.

All I can do is continue to go out and talk to our public investors explain where we're going do it with authenticity do with transparency and Jackie and I worked tirelessly work seven days a week, we were at 60 hours a week our entire teams work side by side with us.

This is a team that's very committed to getting shareholders to the right place the public equity story will follow.

As always as I've always told you and Rick.

We're always six months ahead of you guys.

Stuff that we're doing in this quarter you don't find out until six months from now so when we sit here with a lot of confidence and a lot of conviction.

Because we know we're executing and most importantly, we know how to execute through the storm and building strong liquidity deleveraging. The business. All of these things are seminal to a sound strategy to build long term growth and EPS, which is where we're going.

Very helpful. Thanks, guys.

Thank you.

Thank you we have next question from the line of Richard Choe with Jpmorgan. Please go ahead.

Hi, I had one follow up to the <unk>.

Digital business as we look at fr either.

Our margin target for the longer term given there is some volatility in the quarter to quarter and then on a larger picture one.

Just what are you seeing is the big deal making challenges.

The people should be aware of if you take the first season.

Quarters.

Yes, sure on the FRE margin side, it's consistent with what we've provided in our longer term guidance, which is not 50% to 60% range for FRE shortly.

Surely there are some catch up fees that that does cause some fluctuations Q to Q, but that is the consistent type.

Margin profile that you should expect in our investment management business.

And I think as an add on to that as we have launched new investment management products.

We're seeing that those products are really profitable as they scale because the infrastructure required to launch a new fund we have all of that here.

In our home office now we've got the SEC accounting and we've got the fund level accounting, we've got the reporting asset management.

All of those skills are now resident in house, and so as we bring new ideas onto the platform, it's really easy to ramp those ideas up, particularly as we look around the corner and as we continue to build our flagship product our.

Our investment management team is pretty set may.

Maybe occasionally theres associates and analysts that come and go there's.

VPN principal level folks being promoted but our senior partnership structure the senior leaders across the firm are set.

Not adding any new SG&A.

To really build out new strategies all of the strategy through here for the exception of private equity, which we discussed earlier today on the call and so we're getting finally the benefits of scale. This was a choppy quarter as Jackie said there were some one timers in <unk>.

Third quarter last year, and there were some one timers in third quarter. This year that candidly one was quite good and one was not quite good but again investors need to focus on the normalized earnings that Jack you mentioned earlier that is the true north of the business the run rate and that run rate is scaling and growing and growing quite fast.

The key takeaway from the quarter I think on dealmaking.

Just having come from a conference with a lot of my peers, and then talking to them, where I think everyone was pretty open and transparent.

Look dealmaking today is challenging.

It's not impossible.

The best in breed firms knowhow to be creative and get deals done and we're doing that I think as you can see inside the quarter.

We announced a series of new transactions and where we find the activity is strongest today in dealmaking is actually down in the existing platforms. So why do we say that our existing platforms or doing M&A because they have liquidity. They have strong liquidity, we have as I said earlier, we have close to $4 eight nine.

<unk> 9 billion of callable capital in our funds. So we can support our existing port coast as they do bolt on M&A and they continue to grow.

We saw that as I said inside this quarter for example, like Atlas edge and Europe did a fantastic tuck in in Germany, acquiring a series of edge data centers that were absolutely central to the growth of that business. We did that transaction quickly discreetly, we had the capital at our discretion our partner Liberty.

Global who shares that business with us Mike frees and Charlie Bracken also understood how to move quickly there and so we're seizing opportunity at the portfolio company level, having strong companies that are that are candidly had been deleveraging is very important I mentioned today, how we've been able to de lever.

Our operating businesses, even in this volatile market and Thats really important so having a strong balance sheet, having access to liquidity that's never been more important than it is today in terms of new platform formation.

We've got a lot of great new ideas, we've got.

Just an investment committee. This morning, we looked at five new ideas. We're open for business. We have a lot of capital we're being very hawkish as I said earlier about how we deploy that capital look the bars moved up.

The cost of capital has moved up and we've had to be more creative on how we finance transactions green loans.

For example is a great way to do it.

Looking to banks and foreign territories that are open for business and have strong balance sheets look you go back Jackie to 2008, when you and I were in the tower business.

The loans that we did in 2009 at that point were mostly Canadian banks, we had to go outside the United States to borrow capital.

American Tower did that global tower partners did that.

In 2001, and 2002, we had to go out and we had to find private debt capital to get things financed as we engaged in a series of Prepack bankruptcy is around the CLEC space and in other digital infrastructure assets that were over Levered at that time, So you have to be creative.

And I also think you need friends in this environment, we're working very carefully with a lot of our friends.

And other private credit shops, we're looking at banks in different places to go find capital and then I think there are windows, where you can take advantage of.

I'm certain government programs for lending and for example down in Latin America, we're spending a lot of time with OPEC that's.

Thats open for business, they're lending money to digital infrastructure companies that are engaging in greenfield activity like new data centers in new towers. So you got to work a little harder.

It's no different than it was no one O eight but once again, having a team that's been through that fire and understands how to navigate it and most importantly knows how to grow through it and having strong liquidity those are the teams that win.

Great. Thank you.

Youre welcome. Thank you. Thank you.

Thank you we have next question from the line of Eric <unk> with Wells Fargo. Please go ahead.

Hi, Thanks for taking the question I'll just ask one so.

Curious if you could just comment on your data center businesses. We saw some of the Mega cap cloud companies report slowing cloud revenue growth this past quarter and Theres been some concern around smaller enterprises repaid repatriate workloads from the cloud. So maybe you could talk a little bit about what your leasing pipeline looks like within Hyperscale and enterprise.

<unk>.

Particularly advantaged in day to day and then.

Been impacted at all by some of the supply challenges, we continue to see in the market around long lead times for equipment and power procurement. Thank you.

Thanks, Eric always good to hear from you.

That's a three part question so lets unpack it first and foremost around leasing pipelines we.

We just came out of for example, the data Bank Board meeting yesterday.

And they are leasing pipeline has actually held steady. So for example data bank for the year is at 158% of their leasing budget, it's been a fantastic year for leasing at Databank. Meanwhile, with the sales pipeline.

Vacillating between $25 million and net bookings and 29 million in net bookings.

And today that pipeline sits at $28 million, so coming out of one of the strongest quarters. The company has ever had the pipeline actually has gone from it was $29 million in June that fell as low as $27 million in September and now here coming into November the sales pipelines at 28, So we've actually seen the pipeline on the edge compute.

<unk> side move up Eric So I think Thats, a good thing and we've also seen lease rates move up.

<unk>, 10% and 12% on the edge side, I think that's pretty consistent with what <unk> heard from Charles and the team at Equinix yesterday. So this notion of having highly interconnected data centers on the edge is where you want to be at the same time in our Hyperscale business.

We've had a year that is really hard to even understand.

Particularly bookings in Asia were up 60% year over year, our European bookings were up over 220% year over year in our North American bookings were up 128% year over year. These are astounding numbers, Eric in terms of what vantage has been able to do and then of course scholar down in Latin America, our Hyperscale platform down there their bookings also.

So up over 156% year over year, so where those pipelines today theyre generally holding I would say the pipeline down in Latin America is actually up a little bit.

Quarter over quarter.

The pipeline in North America for vantage has held steady.

Asia Pac is up about 20% in terms of the leasing pipeline in Europe is actually up quite significantly and what's interesting to me Eric is about Europe Europe to me is one of the most challenging and for US one of the biggest opportunities right now theres not a lot of power.

You really had to be in Europe , two years ago acquiring land getting will serve letters building your substations lining up power for the next five years and that is something that cereal and the team at vintage did really well.

<unk> acquired a lot of land acquired.

Acquired very significant amounts of power.

Come to those campuses thinking not just in two year increments, but really thinking strategically in five year increments and so as we see that vantage is out leasing its peers as a factor of two to one in Europe .

Not accidental that was because of the planning that the team put in place two years ago to procure the right amount of land in the right amount of power now you did hit one thing on the head Europe definitely has supply chain issues in terms of specialized componentry related to cooling.

And other factors in the Datacenters and certainly componentry related to servers, which are really a customer issue not not our issue in hyperscale that is delaying some installs.

I would tell you that on average new installs are suffering somewhere between 60 to 90 day lag in Europe , and we're not seeing that same consequence in Asia Pac at all in Asia Pac actually we've seen supply chain be quite open and then in North America, It's very anecdotal it really goes market to market. Some markets we are delivering on time.

Like for example, we posted something today about Salt Lake City, six which is a new 22 megawatt facility in Salt Lake for Databank, we actually delivered that site approx.

Approximately 60 days early than we thought we'd deliberate now, but theres also markets where were having challenges Santa.

Santa Clara has no power everyone knows the challenges around the transmission and distribution of Dominion and.

In datacenter Ali and then of course, we've got some challenges in Texas.

Grid needs to be upgraded and transformed so there is markets where power is actually really the bottleneck and so you got to be creative and you've got to think long term and I think this was the genius of what we saw in switch and partnering with Rob Roy.

As a business today, that's based on 100% renewable energy and what Rob has done and done a very good job of is acquiring big swaths of land in key markets, where he is not reliant on the grid, where he has gone out and <unk> found alternative sources of energy to navigate around that and so.

And we're finding demand it switches up because we've solved the power issue and we've got large amounts of land a lot of energy capacity in that business, we think will perform quite well for us. So.

Here is being surgical rate, having management teams in the markets that understand the opportunities and Tim.

And can exceed their peers in terms of leasing and in pipelines, but I would tell you by and large in the in this quarter pipelines are holding what you said about the hyperscale or in terms of their curtailing of Capex look we haven't seen that yet.

We hear about it we hear that they want to curtail capex, but to be honest their businesses are still growing.

The velocity of data consumption, the velocity of data storage, particularly in Europe , where you have very very high data sovereignty laws, you can't navigate around that stuff, Eric and so you got to keep turning up capacity, but I think you will see it.

Is much like we've seen in towers and fiber and small cells through the years is when you look back in <unk> and you look back in <unk> when the cost of capital got expensive.

You pulled the liquidity out of the system and you pull it back and that cost of capital gets expensive for the mobile operators inevitably what happens is they stopped self performing and they work with folks like us.

That can show up can build for them deliver on time and create good value for them and as I said earlier, we have a very strong liquidity position. We are executing on greenfield at the portfolio company level all of our businesses have excess cash on their balance sheets, we took leverage down.

That decision last year to securitize, all of our businesses and de lever and that was a smart decision.

I made that proclamation in may of last year in front of close to over 100 of our Lps globally, telling them that we thought a recession was coming we weren't afraid to call. It.

And so by calling it we prepared for it and once again, having a good management team that's prepared and understands how to navigate the storm is everything in this environment.

<unk> is where you want to be focused on right now if you're an investor.

Okay.

Hi, Mark.

Thanks, Eric.

Thank you we have next question from the line of Jon Atkin with RBC capital markets. Please go ahead.

Thanks, very much so I think you've given a lot of good color on fund raising and then just now I'm kind of capital deployment and trends that youre seeing if we could maybe give us a towers a little bit and we've heard the pure plays all kind of have their conference calls we've had the carriers talk a little bit about their <unk> plans with anything youre seeing.

By region that you know.

We need to amplify or maybe you provide a contrasting view we will have heard so far from the msos and the teleconference.

Well look you know.

What I would say is what we're hearing anecdotally is certainly some customers are going to put more capex out next year.

We're really confident around what T. Mobile is doing we're confident that Charlie gets fully financed and we're going to continue to support dish look or our revenue growth year over year is up close to 26% organic revenue growth up at the <unk> level for all of our towers globally is up six 8% Jonathan This is <unk>.

Pretty good environment leasing pipelines are holding steady we havent seen any degradation.

We have heard anecdotally from AT&T that they may cut some capex and Thats public information I'm not sharing nonpublic information that's been out there that perhaps some of their capex may be curtailed, we haven't seen that so far from horizon and so domestically here our customers are healthy.

They're having success launching their <unk> products. They are having success by G to the home.

We do believe that.

At some point Capex will go down Jonathan that's what happened to know one thats what happened in OE, it's logical to assume that there will be some sort of diminishment of Capex I don't know Jackie <unk> year round for both of those cycles to any any thoughts around capex at all that Youre hearing book I think it's very consistent with what you are saying Mark and at the end of the day.

We are blessed to be in a mission critical secular tailwind winner in our industry. So it's going to continue and they are clearly stated their needs to densify and they bought a lot of us are.

Bob a lot of spectrum, and theyre going to need to deploy itself.

It will be good for us in the short and intermediate runs no matter what.

Yeah.

Thanks for that in terms of Latam macro towers, maybe principally Brazil, just interested in any and it takes there and then outdoor small cells.

You.

You talked a little bit about that because maybe.

Is 2024 going to be the year, or maybe 2023 or when do we see.

Any kind of an uptick in demand.

It's Kelvin Jonathan its comment no.

I think.

We've started to see an uptick in small cell capex spending towards the back end of this year.

There are a series of new rfps or different request for different city builds.

By all the carriers once again the carriers for small cells in the last two years have been doing a lot of self performing we don't think that that makes sense for them go forward.

We think that in a market where.

Capex is constrained and we think liquidity is constrained and interest rates are going up even though even the big mobile carriers feel that pain, and so I think there'll be a continued desire to rotate to outsourcing and small cells are difficult you got to hold a lot of whip on your balance sheet and it's time consuming it's labor intensive and so we.

We're seeing a pickup in <unk>.

In outdoor backlog, particularly a fresh wave, which is our European business and of course it X net here in the U S. So we're very optimistic long term about small cells. It always takes a little longer Jonathan as you know, we always think the big small cell bookings are right around the corner.

Inevitably this mismatch.

This macro environment creates a cross wind that certainly could defray some of that capex.

In anomaly into 'twenty, three but as you said your intuition is correct. Jonathan we do think small cells will be most prevalent in 'twenty four 'twenty five we think thats really when the customers have told us they're going to densify and.

We're building small cells in cities like Santiago <unk>.

Good.

London of course is one of our big growth markets right now with what's going on a fresh wave and then all across the major markets here in the U S. All all four carriers are now actively.

With new contours on the street for outdoor small cell so.

You should continue to ask this question every quarter, because we're happy to give you the granular detail.

And actually for different markets, because edge point is now doing small cells as well.

In southeast Asia, and what sharing the carriers on it as they are continuing to deploy their <unk> at home.

Options and product sets it's.

It's great for people right to get access to.

High speed Internet.

<unk> services at home without.

Putting fiber all the way to the side of the house and the <unk>.

The Densification that cell network is absolutely crucial for that so the more success. They have there the better for our business.

And then macro tower leasing in Brazil, an opportunities for you to either see inorganic or.

Maybe for organic growth.

What type of market.

Sorry, Jonathan I didn't catch the full question I missed the first part of it is macro yes, yes, yes macro tower.

Demand.

Brazil, and what Youre seeing.

Organic growth prospects as well as maybe give organic growth prospects.

Or less down there.

Well look I think on the inorganic side, we've been very active on the M&A side.

I think you saw SBA was active as well so we continue to invest in Brazil.

Proven to be a very strong market for us in terms of the organic growth, it's actually the second fastest organic growth market for us.

So thats, 10% organic growth this year.

And we're very pleased with what's happening in Brazil. So we're seeing a lot of good M&A opportunity, we're seeing strong organic growth Brazil.

Brazil has been one of the bright spots for us.

<unk>.

Thank you.

Thank you we have next question from the line of Ric Prentiss with Raymond James. Please go ahead.

Hey, guys, sorry, trying to be in two places at once on earnings day.

Mark wanted to follow up on a couple of things glad to hear the small cell commentary to jonathan's question, we've been suggesting small cells would be kind of a middle of the 2020 decade item. So it sounds like Thats. What you are seeing can you give us a little color on the self performing to outsourcing kind of ballpark what percent that could be in the U S. Because that's something we've also thought that fiber.

Budgets at companies like Verizon might come down and more of those is there some.

Ballpark frame you can help us understand the small cell self performing to outsourcing trend.

Well I think look I want to volts, what each carrier does but I think today, it's pretty much a 50 50 mix.

With each of the four carriers, having very different mixes.

There is one customer in particular is doing 80 20 self perform there's one customer that's doing kind of 40 60 self perform there's one customer that's doing zero self perform and 100% outsourced.

So Rick it's not you can't paint it with one paintbrush what I can tell you is we are active with all four customers right now in the U S. Some are more active than others.

On the outdoor side on the indoor side, our value proposition has never been stronger between point go an extra net we're very busy extremely busy in fact on the <unk> side.

We can't even keep up with the amount of work that we're doing because the carriers have decided self performing on endures a bad idea.

And so a lot of that I would say today indoors, probably 90% outsourced 10.

10% self perform.

It's just too difficult and it's too expensive. So the shared infrastructure model works on the indoor side Rick.

Okay.

Another question with the medical group and sorry, Rick one other thing because we operate we operate in Europe as well.

All cells in Europe today, it's 100% outsourcing in Europe .

Which is good news for fresh wave yes.

Carriers too.

<unk>.

You mentioned I think touched on briefly the vantage tower portfolio out there with not asking where you think it goes or who is the winner out there, but what does it mean for your stake in the business how does that.

Affected by whats being discussed out there.

Look I think we'll make a decision if there is an offer for the company or there is a partial offer for the company we will look at it as a.

<unk> is an important shareholder the largest.

Shareholder, Besides Vodafone and will vote with our wallet and vote with our Lps best interest.

Price talk that we've heard around it is incredibly accretive for us.

Our fund investors win and make money and that's what we're here to do.

We're here to raise capital deploy it and make sure we create winning outcomes for investors.

The core focus of what digital bridge us today. So thankfully we got in on that IPO at an early price, we're delighted to help Nick read and pure cloud skip that IPO done and if there is an outcome too.

To sell that asset at a great price then.

We will share them and support them.

And I always like saying that carried interests get actually realized.

And performances.

That's for sure.

Final point for me.

T mobile on their earnings call.

Talked a little bit about what they would be interested in doing some of their own fiber.

Or would they partner with people on fiber any thoughts about.

Wireless operators moving more into fiber and how that might play out again, maybe not specific to T mobile, but just in general it was an interesting comment by one of my phone on the call. This group this quarter.

Well look I think they're all doing it right I mean T. Mobile has been Mike's been really direct about what he wants to do and I think Deutsche Telekom as the parent co understands the value and in bringing not only wireless to the home, but in certain markets supplementing that with fiber, where they have a strong brand and a strong customer relationship at&t's already.

Doing it very successfully I mean, what what Jeff Macau pushes up too.

And Chris Samba and the team they are executing well on the fiber side and they are out raising infrastructure capital private capital.

To supplement that build in.

That model has worked well in Europe in terms of carriers working with investors to do it.

We've worked with customers to help build their their backbone or their wholesale network for fiber to the home and we would of course support not only AT&T, but T mobile and we've supported Verizon in the past and building fiber for them. So.

What you see is a recognition Rick that.

Having multiple technology paths to retain the sub or to retain the consumer is what's on the minds of T Mo AT&T, and Verizon and even Charlie and dish.

Taking control of the customer and beyond to deliver technology for them across the platform that makes a lot of sense because ultimately as you know Rick to get that customer and get them signed up and put them on your platform is very expensive you certainly don't want to see him leave.

Makes sense thanks for the color.

Youre welcome Thanks, Rick.

Thank you ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back over to Marc Ganzi CEO for closing remarks over to you Sir.

Yes. Thank you look first and foremost don't want to thank everyone for their time and attention today.

I want to close and saying here's what matters.

What matters in an environment like this is having strong liquidity.

What matters is are our strong.

Strong balance sheet and our commitment to delever.

Think taking leverage from where it was when we inherited this company. It's ultimately three to four turns and perhaps even inside of that.

Over the next 120 days is absolutely central to our success.

Having the right firepower to execute deals that we think are going to be opportunistically strong in this quarter next quarter is absolutely vital and we're very fortunate to have the firepower to continue to go out and dealmaking simplification, it's really important.

I want to thank the team we've got in this business into a place where the investment management platform, our asset light approach to digital infrastructure, it's working and it requires some patience and I know investors sometimes are frustrated by the lumpiness in the print, but we're getting there every quarter. This gets easier and we can promise you our commitment to that is to <unk>.

Every quarter to make it easier for you our investors and last but not least returning profits back to you our shareholders.

In this quarter, the data bank and wild stone outcomes cannot be underestimated.

We have an incredibly valuable portfolio.

You saw with the Wild stone transaction that we sold that business way north of where our NAV is.

Jackie and my background is we're very conservative we mark our portfolio of companies very conservatively and we think ultimately as we continue to build the platform and we continue to exit investments. That's good news that is incredibly good news for you our shareholders it cannot be understated and it cannot be overlooked how important carried <unk>.

As a part of our methodology.

Ultimately frame this business and how you value it.

So those are kind of the five key things that matter.

I just want to continue to thank all of our investors for their support if you want to continue the dialogue with US seven white is always available to you Jackie and I are available to you. This is a partnership between us and our shareholders and we always welcome the dialogue.

Everyone have a great weekend and thank you again for being a part of the <unk> story take care.

Thank you ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Okay.

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Yes.

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